Environmental Due Diligence Services

As an approved environmental consultant with almost all of the major financial institutions as well as a U.S. Small Business Administration (SBA) preferred contractor, Basics implements various levels of environmental due diligence studies and environmental reviews for properties under consideration by public and private financial institutions for real estate transfer and financial transactions.

Basics specializes in performing only “basic” environmental due diligence reports for real estate transactions in Northern California. As such, we provide these services on a quick turnaround basis and believe our Environmental Site Assessment reports are some of the best available!

Our various environmental site assessment studies range in scope, from performing ASTM Environmental Transaction Screens to full ASTM/AAI Phase I Environmental Site Assessments. In addition, expert opinion and recommendations can be given on prior environmental reports performed by other environmental professionals. Sites assessed have ranged from mixed use commercial office buildings and motels to gasoline service stations and hazardous waste processing facilities.

Our projects are ASTM Standard E1527-21 and E1528-22 compliant! Basics investigations follow relevant protocols set forth by the U.S. EPA‘s All Appropriate Inquiry (AAI) Rule 40 CFR Part 312.

A completed Basics Environmental Site Assessment (ESA) that does not yield a Recognized Environmental Condition (REC) may qualify the individual on the property’s title for an “Innocent Landowners Defense,” meeting criteria set forth in CERCLA §101(40).

Levels of Environmental Due Diligence

Basics performs the right amount of environmental due diligence you require. 

The U.S. Environmental Protection Agency (EPA) oversees enforcement and cleanup of contaminated sites across the United States. The Federal Government enacted the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) in 1980. If you own or have ever owned a property that is presently contaminated, you may be designated as a potentially responsible party (PRP) under the CERCLA regulations. Being designated as a PRP means you may be financially responsible for cleaning up environmental contamination that you did not create. The only way to avoid this liability is through the “Innocent Landowner Defense.” In order to qualify for this defense, you have to show that you made a significant effort to determine if the property was contaminated before you bought it. This effort is called Due Diligence.

A properly conducted Phase I Environmental Site Assessment meets the requirements for due diligence.

Lenders as well as potential title holders of a property follow a number of steps to evaluate the fiscal risks before financing properties. An environmental assessment helps evaluate the suitability of the financed property as collateral:

  1. Will the property value decline as a result of environmental liabilities that are identified before the loan payoff? and
  2. If the borrower defaults, will the bank own a property that is a liability rather than an asset?

The potential costs for environmental site investigations and remediation are substantial. Soft costs for investigation, reporting, and regulatory response can represent a large percentage of the property value. Add costs for sampling, analysis, corrective action implementation, and long-term monitoring, and the overall remediation budget can easily exceed property values. Consequently, potential losses are greater for less valuable property because eventual sale of the property will recover a smaller percentage of the remediation costs. In view of the potential costs for site cleanups, lenders as well as potential title holders of a property utilize environmental assessments to help identify high-risk sites.

Note:  The amount of due diligence a lender may require depends upon the amount of environmental business risk the lender is willing to accept. Many lenders will require a lesser degree of due diligence than is required in a properly conducted Phase I Environmental Site Assessment (i.e., Environmental Questionnaire, Environmental Database Review, Environmental Transaction Screen, Limited Phase I Environmental Site Assessment, etc.). Currently, only a properly conducted Phase I Environmental Site Assessment will meet the requirements of the “Innocent Landowner Defense.”